Iran sanctions will aggravate discord on EU reforms

Finance


One, his plan for a complete federal structure of the monetary and fiscal union is meant to guarantee the strength and the finality of the European project and its legal tender.

Two, such a structure would be impossible to deconstruct by nationalists, populists and similar constituencies blaming all sorts of socio-economic problems on the EU’s single market and the common currency.

Three, I’ll take the liberty of ascribing to Macron this unstated thought: His euro area reform program would also make it impossible for Germany to boss people around; the administrative setup he proposes would unfailingly and routinely enforce the rules of the monetary and fiscal union.

The focus is now on the meeting of the European Council — a forum of EU heads of state and government — on June 28-29, where France and Germany are supposed to present a joint “road map” of European reforms.

French commentators of all stripes expect a damp squib, accusing Macron of talking too much instead of “banging his fist on the table.” Responding to that criticism, the French presidency announced last week that it was looking for substantive decisions next month.

Wish them luck, because Germany does not seem ready for substantive decisions on anything.

In her speech last week to celebrate Macron’s Charlemagne Prize (for contributions to the cause of the European Union), German Chancellor Angela Merkel spoke mainly of the problems the U.S. was creating for the German economy with its unilateral sanctions on Iran.

Macron, in her words, was “bubbling with ideas,” but said nothing about Germany’s response, or what Germany was prepared to do to help “Europe take its destiny in its own hands.”

The reaction to the fallout from Washington’s Iran sanctions is characteristic of ambiguity in French-German relations. In spite of statements that the two countries wanted to stay in Iran’s nuclear agreement, Paris and Berlin are working on separate tracks to get exemptions from the U.S.-imposed sanctions on their companies involved in multi-year and multi-billion deals with Tehran.

France says that the extraterritorial reach of Trump’s Iran sanctions is “unacceptable,” while Germany remains resigned that “nothing can be done about it.” Following that conclusion, Germany is talking about post-Trump policies, because Berlin presumably expects that next November’s mid-term Congressional elections can cripple what they apparently believe will be a one-term presidency.

More realistically, Germany seems to be counting on China and Russia (and perhaps India) to reject Washington’s unilateral sanctions on Iran — offering a way out the German-led Europe is unable to find on its own. All eyes are now on Iran’s ongoing talks in Beijing and Moscow, and a visit of Tehran’s delegation to Brussels next Tuesday.



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